Inflation Just Did Something It Hasn't Done Since 2023, and It Could Trigger a Big Move in Interest Rates (and the Stock Market)
The Federal Reserve is in a difficult position amid the ongoing war with Iran.
Inflation Just Did Something It Hasn't Done Since 2023, and It Could Trigger a Big Move in Interest Rates (and the Stock Market)
Overview
Inflation is a crucial economic indicator, and understanding it can help investors make more-informed decisions. It's primarily measured by the Consumer Price Index (CPI), which tracks the change in price of a basket of goods and services on a year-over-year basis.
The Federal Reserve will adjust the federal funds rate (the overnight interest rate) when the CPI deviates too far from its annualized target of 2%. The Bureau of Labor Statistics (BLS) just released its inflation report for May, and the CPI surged to an annualized rate of 4.2%. The last time it was above 4% was April 2023, and the Fed was aggressively increasing interest rates.
Details
As a result, Wall Street is now forecasting at least one interest rate hike by the end of this year, and here's why the move could derail the momentum in the S&P 500 stock market index.
Source
Originally published at www.fool.com.
